DVD playback was considered a feature of 6th gen consoles. The Panasonic GameCube, which could play DVD's sold worse than the standard GameCube which couldn't play DVD's. The higher price point created a negative against what was a desirable feature at the time.
You know what it really means when an additional SKU doesn't get released outside of Japan? That the whole "DVD is super important" mantra was blown way out of proportion. It's also something that Sony had to learn the hard way because they drank their own kool-aid. Based on the premise that DVD was important, they included the next format, Blu-ray, in the PS3. It cost them dearly because it turned out that people buy video game consoles to play video games. Or consider the Wii which did forego to play movie discs of any kind; it wrecked its competition. Or consider how few people paid for the DVD functionality of the original Xbox.